Monday, 21 March 2016

In
previous 2 auctions bidders had won govt subsidy of about INR 2,750 Cr.

Nine power plants, including
that of Dabhol, GMR and Lanco, on
Sunday emerged as successful bidders in the e-auction of natural gas, securing
7.62 mmscmd gas for running a total 5,942 mw capacity. With the secured gas
supplies, these plants will generate a total 6.79 billion units during six
months to September 2016 and save Rs 18.29 crore in
government subsidy.In
the previous two auctions held in May and September last, the bidders had won
government subsidy of about Rs 2,750 crore to buy imported gas to revive
stranded power plants. The e-auction was conducted this morning which went on
for almost two hours. Under the reverse e-auction, bidders quoted negative subsidy,
or premium of up to three paisa per unit to secure gas supplies.
“The government is delighted to announce the revival of 9 stranded gas-based
power generation plants with an installed capacity of 5,942 MW which have
successfully bid through a transparent and competitive reverse e-auction
process,” Power Ministry said in a press release on Sunday. According to the
statement, these plants would generate 6.79 billion units of electricity, which
will be supplied at or below Rs 4.70 per unit to the purchaser discoms during
the period from April 1 to September 30, 2016.
According to the bid results on MSTC Ltd website, the maximum quantity of 2.35
mmscmd gas was booked by Ratnagiri Gas and Power Private Ltd commonly know as
Dabhol project, followed by Lanco Kondapalli Power at 1.58 mmscmd and GMR Rajahmundry Energy at 1.09 mmscmd. Konaseema
Gas Power booked 0.71 mmscmd, Pioneer Gas Power at 0.55 mmscmd, GMR Vemagiri Power Generation at 0.52 mmscmd, Gama
Infraprop Private Ltd at 0.35 mmscmd, GVK Industries at 0.32 mmscmd and
Sravanthi Energy at 0.25 mmscmd.
Power Ministry said that the auction process successfully concluded on March
20, 2016 wherein nine plants emerged as preferred bidders and were allocated
7.62 mmscmd e-bid regasified liquid natural gas (R-LNG)
. It further said that the re-auction resulted in aggressive negative bidding
with the lowest bid at Rs 0.03 per unit. As a result there are estimated
savings of Rs 18.29 crore to Government s Power System Development Fund (PSDF).
The present reverse e-auction for the Stranded Gas based Plants is the third
phase of auctions conducted under Scheme for Utilization of Stranded Gas Based
Generation Capacity.
The grid connected gas-based power generation capacity in the country is 24,150
MW. Of this, 14,305 MW had no supply of domestic gas. These comprise 29 plants
which were eligible to participate in the auction process held on Sunday, it
said.
As many 11 plants with a cumulative installed capacity of 6,626 MW participated
in the bidding for Phase III. The successful bidders include power plants in
southern areas. The Empowered Pool Management Committee (EPMC), the nodal
authority for this auction had decided to scrap the auction for stranded
gas-based power projects (SGP)
held on Tuesday last in the backdrop of bids hitting zero (subsidy) within
minutes of the start of bidding.

Tuesday, 15 March 2016

The government today said it
will auction 22 mineral blocks in April
and May, including 14 iron ore blocks in Karnataka."During April-May 2016, the Government will
be auctioning 22 blocks, which includes two blocks of limestone in
Chhattisgarh, 14 blocks of iron ore in Karnataka, 6 blocks of limestone in AndhraPradesh,"
Mines Ministry said in a statement.It further said that for the second phase,
during the next fiscal, 42 blocks have been identified by seven state
governments for auction.They include 6 blocks (5 limestone and 1 Gold)
in Chhattisgarh; 8 blocks - 4 limestone and 4 bauxite - in Gujarat,
and 15 iron ore mines in Karnataka.In the first phase, 8 states like AndhraPradesh,Karnataka andChhattisgarhhave
notified 43 major mineral blocks for auctions, it added.So far, auction of two blocks of limestone in
Jharkhand, two blocks of limestone and one block of gold in Chhattisgarh and
one block of iron ore inOrissa has been held."This reflects the fact that not only the
government's decision to auction the mines was correct, but also proves that
the revenue received to the State governments from auction is much more than
the previously received royalty on minerals," it added.

State-owned NTPC, Essar Power,GMR andTata Power will participate in a two-day auction for Rs
1,600 crore subsidy for buying costlier imported gas for running their power
plants beginning on Tuesday.

This is the third reverse e-auction, which will
be held on March 15 and 16, for subsidy support for buying 10 million
standard cubic meters per day (MSCMD) of gas.

"State-run MSTC Ltd will conduct third
reverse e-auction to provide a total subsidy of Rs 1,600 crore for purchasing
RLNG (R-Liquefied Natural Gas) imported by GAIL on March 15 and 16," a
senior official told PTI.

"Earlier MSTC Ltd had planned to conduct
the auction on March 15. But later the plan was changed and it was spread over
two days. The auction will start at 2:00 PM and likely to be over in two or
three hours on both days," official added.

While the auction of stranded gas-based power
projects (SGP) will be held tomorrow, the domestic gas-based power projects
(DGP) bid for the gas subsidy on Wednesday.

While the government will offer Rs 1,400 crore
subsidy for SGPs, the DGPs will be offered Rs 200 crore to buy imported gas to
run their plants.

A total of 10 MSCMD of R-LNG will be imported to
run SGPs as well as DGPs from April 1, 2016 to September 30, 2016. The
expensive 8.9 MSCMD of gas will be imported for SGPs whereas 1.1 MSCMD will be
allocated to DGPs for the six month period, as per the bid document.

This gas subsidy is being provided under the
Power System Development Fund (PSDF), a scheme which was started by the
government last year to revive the gas-based capacity of 24,150 Mw including
14,305 Mw of SGPs and 9,845 Mw of DGPs.

Every company will participate in auction for
each plant separately to get gas subsidy for running the unit.

Earlier last year, the Centre had introduced a
PSDF scheme for importing spot RLNG for the stranded gas and partly stranded
gas-based plants selected through a reverse e-bidding process.

The scheme provides for financial support from
PSDF. The outlay for the support from PSDF was fixed at Rs 7,500 crore — Rs
3,500 crore and Rs 4,000 crore for the years 2015-16 and 2016-17, respectively.

Auctions for the first phase, June 1 to
September 30, 2015, of PSDF Support to gas-based power plants was held in the
months of May 2015. A combined total of 10,270 Mw plants were able to secure
gas allocation. The entire process was completed in less than a month and gas
supply by GAIL started on June 1,
2015.

Auctions for second phase, October 1, 2015, to
March 31, 2016, were held in the month of September 2015 and helped in revival
of gas-based generation plants with installed capacity of 11,717.72 Mw. Total
incremental electricity expected to be generated under phase II is 12,472.6
million units.

Power plants rarely use costly imported LNG as
electricity produced from the fuel would cost much more than that from a
domestic coal-fuelled plant or a domestic gas-fired plant.

Wednesday, 9 March 2016

The
Cabinet is likely to consider mines ministry’s proposal to allow auction of 100
mineral blocks for exploration as early as this week as the government tries to
revive exploration activity in the country.

Last month, Steel and Mines Minister Narendra Singh Tomar had said his ministry
has identified 100 mineral blocks for exploration, which will be offered to the
private sector once the government notifies National Mineral Exploration Policy
(NMEP).

“The mines ministry has sent the proposal for auction of 100 blocks for probing
deep-seated/concealed mineral deposits.It is likely to be taken up this week or the next. The government is committed
to this as it will give a major boost to exploration in India,” a
government official said.

The ministry has engaged SBI Capital, a wholly-owned subsidiary of public lenderState
Bank of India,
as transaction advisor for the proposed auction.

The state-owned metal scrap trading company MSTC has been roped in to set up
the auction platform.

One of the important features in NMEP is attractive provisions for private
investment in the exploration sector, he added. NMEP proposes that private
entities engaged to carry out regional and detailed exploration will get a
certain share in revenue (by way of royalty/premium to be accruing to the
state) from mining operation from successful bidder after e-auction of mineral
block discovery.

Revenue-sharing could be either in the form of a lumpsum or an annuity, to be
paid throughout the period of mining lease, with transferable rights. Selection
of private explorer is proposed to be done through a transparent process of
competitive bidding through e-auction.

For this, reasonable areas/blocks for regional exploration will be
earmarked/identified by the government for auctioning. Moreover, taking forward
its decision to open up the coal sector for commercial mining, the government
may allot more than 10 coal blocks to PSUs in the current fiscal for production
and sale of the fossil fuel.

“The coal ministry is planning to allot more than 10 coal mines to PSUs in the
ongoing financial year,” a source said.

The source further said that while some of the coal blocks would be alloted to
coal-bearing states, non coal-bearing states, including Haryana and Punjab,
will also get a share.

“The coal ministry would ask for special permission for West
Bengal as the Assembly Elections in the state will begin next
month,” the official said.

According to industry watchers, with the allotment of mines to PSUs, the
Centre’s monopoly over mining and sale of coal will come to an end.

An official had said last month that the preliminary exploration in most of
these blocks through initial drilling, known as regional exploration, has been
done.

Coal Secretary AnilSwarup had earlier said, “We are
preparing groundwork for commercial mining... We are looking at a few mines and
the work has been undertaken to identify mines.” For the first time in over 40
years, the government is throwing open the coal sector for commercial mining,
which at present is being undertaken by the central PSU Coal India.

The Cabinet had earlier given its approval to allotment of coal mines to
central and state PSUs for sale of coal, mainly to medium, small and cottage
industries, under the provisions of the Coal Mines (Special Provisions) Act,
2015.

The decision is in line with the government’s target of doubling coal
production to 1.5 billion tonnes by 2020. Of this, it has fixed a target of 1
billion tonne from Coal India
by 2020. Coal India
accounts for over 80 per cent of the domestic production and has a target of
producing 550 million tonnes of coal this fiscal.

The government has made it clear that the decision for commercial mining will
not impact Coal India.

It also said commercial mining “will also enhance domestic production of coal
to meet growing demand of the economy, potentially cutting down imports”. It
had said the coal-bearing states will get additional revenue from such coal
mines “equal to the amount of royalty on the quantity of coal produced on a
monthly basis” during the lease period/life of the mine as well as one-time
upfront payment, which is 10 per cent of the intrinsic value of coal in the
mine, in three installments in the first year of allotment.